Business Alert – US

The Office of the U.S. Trade Representative late last year issued the results of its annual review of the Generalised System of Preferences, a trade preference programme that provides duty-free treatment to a broad range of products made in all least-developed and most developing countries. As part of this review, the USTR granted a petition to remove sleeping bags not containing 20 percent or more by weight of feathers and/or down classified under HTSUS 9404.30.80 from eligibility for duty-free treatment under GSP. As a result of this decision, sleeping bag imports that previously qualified for duty-free treatment under GSP will face a most-favoured-nation rate of duty of nine percent. The USTR also denied a separate petition to remove from GSP two types of self-adhesive plastic tape.

The sleeping bag petition targets imports of sleeping bags from Bangladesh, which surged from US$17,287 in 2008 to US$611,927 in 2009, US$4.2 million in 2010 and US$5.4 million during January-October 2011. Only 26.6 percent of all sleeping bag shipments from Bangladesh were entered under GSP in 2009 but this share climbed to 62.8 percent in 2010 and 66.5 percent during January-October 2011. Mainland China, which is not included in the GSP programme, remains the largest U.S. supplier of subject sleeping bags with a 92.2 percent share of the import market and total shipments of US$71.0 million during January-October 2010, up by 5.5 percent from US$67.2 million during January-October 2010.

The removal of sleeping bags from GSP coverage is expected to have a very negative effect on imports of subject merchandise from Bangladesh and will likely have a mixed effect on textile manufacturers in the mainland. On the one hand, shipments of finished sleeping bags from the mainland will probably increase now that Bangladesh’s duty-free treatment under GSP has been revoked. However, it appears that virtually all of the sleeping bags made in Bangladesh that are being exported to the U.S. are made with mainland Chinese components, and exports of those components from the mainland to Bangladesh are expected to suffer greatly.